This paper investigates the impact of teamwork on analysts' ability to balance accuracy and timeliness. Surprisingly, team analysts demonstrate a lower ability compared to individual analysts. This trade‐off ability is even worse in diverse teams. Further, we find that Confucianism negatively affects this ability. However, this ability significantly improves when star analysts serve on the analyst team, or when analyst team members come from the province where the covered firm is headquartered, or when analyst team members graduate from the same college. Overall, these findings suggest that it is crucial to consider the two performance dimensions simultaneously.
{"title":"A balancing act between accuracy and timeliness: Evidence from analyst forecasts in China","authors":"Lining Han, Bin Qiu, Xixi Yang, Yiwei Zhao","doi":"10.1111/acfi.13233","DOIUrl":"https://doi.org/10.1111/acfi.13233","url":null,"abstract":"This paper investigates the impact of teamwork on analysts' ability to balance accuracy and timeliness. Surprisingly, team analysts demonstrate a lower ability compared to individual analysts. This trade‐off ability is even worse in diverse teams. Further, we find that Confucianism negatively affects this ability. However, this ability significantly improves when star analysts serve on the analyst team, or when analyst team members come from the province where the covered firm is headquartered, or when analyst team members graduate from the same college. Overall, these findings suggest that it is crucial to consider the two performance dimensions simultaneously.","PeriodicalId":335953,"journal":{"name":"Accounting & Finance","volume":"128 4-5","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-02-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139849053","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper introduces an innovative methodology for extracting information from textual data to explain cross‐sectional stock returns, addressing limitations of conventional media tone measures. We find firms exhibiting higher media abnormal tone yield lower future returns in the Chinese market, even when controlling for common risk factors. This effect is more pronounced among firms with low investment, low profitability, and high short‐term reversal. We also find the negative premium generated by media abnormal tone results from mispricing, highlighting investor overreaction despite media's role in disseminating concurrent firm information. Furthermore, the tendency for media outlets to follow suit exacerbates investor overreaction.
{"title":"Media abnormal tone and cross section of stock returns: Evidence from China","authors":"Lu Yan, Yong Ma, Changshuai Li, Guohao Tang","doi":"10.1111/acfi.13230","DOIUrl":"https://doi.org/10.1111/acfi.13230","url":null,"abstract":"This paper introduces an innovative methodology for extracting information from textual data to explain cross‐sectional stock returns, addressing limitations of conventional media tone measures. We find firms exhibiting higher media abnormal tone yield lower future returns in the Chinese market, even when controlling for common risk factors. This effect is more pronounced among firms with low investment, low profitability, and high short‐term reversal. We also find the negative premium generated by media abnormal tone results from mispricing, highlighting investor overreaction despite media's role in disseminating concurrent firm information. Furthermore, the tendency for media outlets to follow suit exacerbates investor overreaction.","PeriodicalId":335953,"journal":{"name":"Accounting & Finance","volume":"35 8","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-01-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139599857","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We examine how family firms strategically manage earnings by using discretionary accruals (AEM) and real activities (REM). Using a sample of privately controlled but publicly listed firms in China between 2007 and 2018, we find that, under normal circumstances, family firms are less (more) likely than nonfamily firms to use REM (AEM) for earnings management, and they use REM and AEM as substitutes. However, when firms are under pressure to meet important earnings benchmarks that are critical to the survival of their businesses, family firms increase their use of REM more than do nonfamily firms. Finally, family firms strategically use REM to improve their future firm performance. This study challenges the unidirectional relationship between family firms and earnings management that is typically documented in existing studies.
我们研究了家族企业如何利用全权应计制（AEM）和实际活动（REM）对收益进行战略管理。我们以 2007 年至 2018 年间中国私人控制但公开上市的公司为样本，发现在正常情况下，家族企业比非家族企业更少（更多）使用 REM（AEM）进行收益管理，并且它们使用 REM 和 AEM 作为替代品。然而，当企业面临达到对企业生存至关重要的重要盈利基准的压力时，家族企业比非家族企业更倾向于使用 REM。最后，家族企业战略性地使用 REM 来提高未来的企业绩效。本研究对现有研究中家族企业与收益管理之间通常存在的单向关系提出了质疑。
{"title":"Strategic earnings management in family firms","authors":"Liangbo Ma, Shiguang Ma","doi":"10.1111/acfi.13224","DOIUrl":"https://doi.org/10.1111/acfi.13224","url":null,"abstract":"We examine how family firms strategically manage earnings by using discretionary accruals (AEM) and real activities (REM). Using a sample of privately controlled but publicly listed firms in China between 2007 and 2018, we find that, under normal circumstances, family firms are less (more) likely than nonfamily firms to use REM (AEM) for earnings management, and they use REM and AEM as substitutes. However, when firms are under pressure to meet important earnings benchmarks that are critical to the survival of their businesses, family firms increase their use of REM more than do nonfamily firms. Finally, family firms strategically use REM to improve their future firm performance. This study challenges the unidirectional relationship between family firms and earnings management that is typically documented in existing studies.","PeriodicalId":335953,"journal":{"name":"Accounting & Finance","volume":"65 16","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-01-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139526866","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We investigated the role of culture in inter‐regional mergers and acquisitions (M&As) within national borders, using a dataset that includes M&As conducted by Chinese listed firms from 2005 to 2019. Our research provides compelling evidence that the likelihood of an acquirer initiating a merger proposal – and the subsequent probability of reaching an agreement – decreases as the cultural tightness gap between the acquiring and target firms widens. Furthermore, we found that this negative impact of cultural tightness distance is more pronounced in non‐state‐owned firms and firms led by younger CEOs.
{"title":"Cultural tightness–looseness and inter‐regional mergers and acquisitions: Evidence from China","authors":"Hui Liu, Leng Ling, Ying Wang","doi":"10.1111/acfi.13228","DOIUrl":"https://doi.org/10.1111/acfi.13228","url":null,"abstract":"We investigated the role of culture in inter‐regional mergers and acquisitions (M&As) within national borders, using a dataset that includes M&As conducted by Chinese listed firms from 2005 to 2019. Our research provides compelling evidence that the likelihood of an acquirer initiating a merger proposal – and the subsequent probability of reaching an agreement – decreases as the cultural tightness gap between the acquiring and target firms widens. Furthermore, we found that this negative impact of cultural tightness distance is more pronounced in non‐state‐owned firms and firms led by younger CEOs.","PeriodicalId":335953,"journal":{"name":"Accounting & Finance","volume":"106 5","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-01-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139615614","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper examines the impact of innovator CEOs on their firms' IPO underpricing, long‐run performance and post‐IPO innovation. Firstly, we find that IPO firms led by innovator CEOs experience lower first‐day returns (indicating lower IPO underpricing). This phenomenon can be attributed to a CEO's innovative ability, as it plays a pivotal role in mitigating information asymmetry within the IPO market. Secondly, we observe that IPO firms with innovator CEOs have greater IPO long‐run performance. Lastly, our analysis reveals that IPO firms led by innovator CEOs demonstrate greater firm‐wide innovation up to 4 years after the IPO. Overall, our study highlights the effect of CEO characteristics on firm performance in the IPO market.
{"title":"Do innovator CEOs matter in IPOs?","authors":"Zhilu Lin, Wentao Wu, Suyan Zheng","doi":"10.1111/acfi.13218","DOIUrl":"https://doi.org/10.1111/acfi.13218","url":null,"abstract":"This paper examines the impact of innovator CEOs on their firms' IPO underpricing, long‐run performance and post‐IPO innovation. Firstly, we find that IPO firms led by innovator CEOs experience lower first‐day returns (indicating lower IPO underpricing). This phenomenon can be attributed to a CEO's innovative ability, as it plays a pivotal role in mitigating information asymmetry within the IPO market. Secondly, we observe that IPO firms with innovator CEOs have greater IPO long‐run performance. Lastly, our analysis reveals that IPO firms led by innovator CEOs demonstrate greater firm‐wide innovation up to 4 years after the IPO. Overall, our study highlights the effect of CEO characteristics on firm performance in the IPO market.","PeriodicalId":335953,"journal":{"name":"Accounting & Finance","volume":"26 10","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-01-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139531575","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The effect of family control on corporate governance and risk‐taking behaviours remains disputed worldwide. We examine how family control affects the financial distress of firms listed on the Chinese stock market. Our empirical findings suggest that family firms, particularly those with descendant CEOs, face significantly higher financial distress risk. Higher debt levels and more diversified acquisitions of family firms can partially explain their higher financial risk. Further analysis indicates that institutional investors help reduce the financial distress risk of Chinese family firms. We contend that institutional investors play vital roles in enhancing the corporate governance of family firms in China. Taken together, our study urges attention to the financial distress risk of family firms in a transient economy.
{"title":"Family control, institutional investors, and financial distress: Evidence from China","authors":"Hongxiao Li, Yunfan Gao, Yanjian Zhu, Lili Dai","doi":"10.1111/acfi.13223","DOIUrl":"https://doi.org/10.1111/acfi.13223","url":null,"abstract":"The effect of family control on corporate governance and risk‐taking behaviours remains disputed worldwide. We examine how family control affects the financial distress of firms listed on the Chinese stock market. Our empirical findings suggest that family firms, particularly those with descendant CEOs, face significantly higher financial distress risk. Higher debt levels and more diversified acquisitions of family firms can partially explain their higher financial risk. Further analysis indicates that institutional investors help reduce the financial distress risk of Chinese family firms. We contend that institutional investors play vital roles in enhancing the corporate governance of family firms in China. Taken together, our study urges attention to the financial distress risk of family firms in a transient economy.","PeriodicalId":335953,"journal":{"name":"Accounting & Finance","volume":" 6","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-01-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139624622","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study examines the effect of stock liquidity on firm productivity. Our findings indicate that stock liquidity positively affects firm productivity. Our study provides several pieces of evidence to show that stock liquidity enhances firm productivity through facilitation of corporate governance by shareholders and stock price efficiency. Additionally, we confirm that the impact of stock liquidity on productivity is more pronounced for firms with lower attendance at shareholder meetings, with less financial constraints and that are state‐owned enterprises. This study makes a valuable contribution to the existing literature by presenting novel evidence regarding the influence of stock liquidity on firm productivity in emerging markets.
{"title":"Exit as governance: The effect of stock liquidity on firm productivity","authors":"Tianyu Bai, Zhongfei Li","doi":"10.1111/acfi.13222","DOIUrl":"https://doi.org/10.1111/acfi.13222","url":null,"abstract":"This study examines the effect of stock liquidity on firm productivity. Our findings indicate that stock liquidity positively affects firm productivity. Our study provides several pieces of evidence to show that stock liquidity enhances firm productivity through facilitation of corporate governance by shareholders and stock price efficiency. Additionally, we confirm that the impact of stock liquidity on productivity is more pronounced for firms with lower attendance at shareholder meetings, with less financial constraints and that are state‐owned enterprises. This study makes a valuable contribution to the existing literature by presenting novel evidence regarding the influence of stock liquidity on firm productivity in emerging markets.","PeriodicalId":335953,"journal":{"name":"Accounting & Finance","volume":"91 3","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-01-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139440309","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Xiao Chi Wang, Wei Hao, Jiali Fang, Ji (George) Wu, Liping Zou
This study explores the relationship between social trust and firm debt maturity mismatch in the Chinese context. Additionally, we investigate the economic mechanisms through which social trust affects debt maturity mismatch, and the differential roles played by social trust among firms with different characteristics. We employ enterprise trustworthiness scores and provincial blood donation rates as our measures of regional social trust level and find a negative relationship between local trust and firm debt maturity mismatch, suggesting that social trust which promotes ethical norms acts as a restraint on firms' propensity for excessive risk. An alternative but consistent explanation is higher social trust increases debtors' willingness to lend, hence it reduces firms' funding costs and consequently the potential cost‐saving motivation behind such a mismatch. We further document evidence that social trust improves the firm information environment and consequently risk‐taking and/or the ability to reduce funding costs. The study also reveals variations in the role of social trust based on firm characteristics, such as leverage and profitability, and the ownership structure (state‐owned enterprises vs. non‐state‐owned enterprises). The findings contribute to the literature by highlighting the increasing importance of social capital for policy and governance.
{"title":"Trust and corporate debt maturity mismatch: Evidence from China","authors":"Xiao Chi Wang, Wei Hao, Jiali Fang, Ji (George) Wu, Liping Zou","doi":"10.1111/acfi.13214","DOIUrl":"https://doi.org/10.1111/acfi.13214","url":null,"abstract":"This study explores the relationship between social trust and firm debt maturity mismatch in the Chinese context. Additionally, we investigate the economic mechanisms through which social trust affects debt maturity mismatch, and the differential roles played by social trust among firms with different characteristics. We employ enterprise trustworthiness scores and provincial blood donation rates as our measures of regional social trust level and find a negative relationship between local trust and firm debt maturity mismatch, suggesting that social trust which promotes ethical norms acts as a restraint on firms' propensity for excessive risk. An alternative but consistent explanation is higher social trust increases debtors' willingness to lend, hence it reduces firms' funding costs and consequently the potential cost‐saving motivation behind such a mismatch. We further document evidence that social trust improves the firm information environment and consequently risk‐taking and/or the ability to reduce funding costs. The study also reveals variations in the role of social trust based on firm characteristics, such as leverage and profitability, and the ownership structure (state‐owned enterprises vs. non‐state‐owned enterprises). The findings contribute to the literature by highlighting the increasing importance of social capital for policy and governance.","PeriodicalId":335953,"journal":{"name":"Accounting & Finance","volume":"56 24","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-12-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138946235","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper investigates the effects of climate risk on corporate innovation in China. Employing a city‐level climate risk indicator that we constructed and a sample of 21,430 firm‐year observations of Chinese‐listed companies, we find that climate risk is negatively associated with corporate innovation investment and outcome. These results are robust to alternative empirical designs and identifications. Our mechanism analyses reveal that climate risk impedes corporate innovation by motivating firms to increase cash holdings as financial reserves. Additional analyses suggest that the adverse impact of climate risk on corporate innovation is more pronounced for high‐tech firms, and less salient for firms with higher financial constraints and female Chairperson or CEO. Furthermore, the decrease in corporate innovation due to climate risk can lead to a reduction in firm value. These findings contribute to the existing literature on climate risk and corporate innovation and inform regulators and listed firms concerning climate risk.
{"title":"How does climate risk affect corporate innovation? Evidence from China","authors":"Bin Li, Yao Yao, Muhammad Usman, Miaodi Han","doi":"10.1111/acfi.13215","DOIUrl":"https://doi.org/10.1111/acfi.13215","url":null,"abstract":"This paper investigates the effects of climate risk on corporate innovation in China. Employing a city‐level climate risk indicator that we constructed and a sample of 21,430 firm‐year observations of Chinese‐listed companies, we find that climate risk is negatively associated with corporate innovation investment and outcome. These results are robust to alternative empirical designs and identifications. Our mechanism analyses reveal that climate risk impedes corporate innovation by motivating firms to increase cash holdings as financial reserves. Additional analyses suggest that the adverse impact of climate risk on corporate innovation is more pronounced for high‐tech firms, and less salient for firms with higher financial constraints and female Chairperson or CEO. Furthermore, the decrease in corporate innovation due to climate risk can lead to a reduction in firm value. These findings contribute to the existing literature on climate risk and corporate innovation and inform regulators and listed firms concerning climate risk.","PeriodicalId":335953,"journal":{"name":"Accounting & Finance","volume":"38 4","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-12-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139164855","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study investigates the enhancing effect of environmental, social, and governance (ESG) disclosure on investor relations management (IRM). The better the ESG disclosure, the higher the level of IRM. furthermore, this enhancement is achieved by reducing information asymmetry, improving information dissemination efficiency, and attracting investors attention, and it is more prominent in a sound institutional environment and a concentrated shareholding structure. Moreover, institutional investors show greater receptivity to ESG‐driven IRM compared to individual investors. Finally, we indicate that IRM is enhanced by ESG disclosure, ultimately fostering high‐quality corporate development. These findings provide valuable insights for promoting the standardisation of ESG disclosure and optimising IRM practices.
{"title":"Does corporate ESG disclosure enhance investor relationship management? Evidence from China","authors":"Xinye Liang, Peng Cao","doi":"10.1111/acfi.13208","DOIUrl":"https://doi.org/10.1111/acfi.13208","url":null,"abstract":"This study investigates the enhancing effect of environmental, social, and governance (ESG) disclosure on investor relations management (IRM). The better the ESG disclosure, the higher the level of IRM. furthermore, this enhancement is achieved by reducing information asymmetry, improving information dissemination efficiency, and attracting investors attention, and it is more prominent in a sound institutional environment and a concentrated shareholding structure. Moreover, institutional investors show greater receptivity to ESG‐driven IRM compared to individual investors. Finally, we indicate that IRM is enhanced by ESG disclosure, ultimately fostering high‐quality corporate development. These findings provide valuable insights for promoting the standardisation of ESG disclosure and optimising IRM practices.","PeriodicalId":335953,"journal":{"name":"Accounting & Finance","volume":"52 4","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-12-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138593994","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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